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Supplier Development (Full Article)

Supplier development is one of the key issues in China in order to be successful. To find qualified suppliers is one of the most important tasks. In many cases this task is not successful, because the really qualified suppliers choose their customers. Here the Chinese market is different from European and North American market yet. Despite the economic crisis, are Chinese, successful companies are able to confidently reject customers or orders, if the volumes are not high enough, or just the target price was too low. Yet China has not completed the transfer of a seller's market to a buyers' market.

Another important point in choosing the right supplier is the quality. Many companies procure their products or parts from Chinese companies and then have to find that the quality requirements are not or only partially fulfilled. One reason for this is a different understanding about what quality means. In many Chinese companies are suffering the Proverbs: "As long as the product still fulfils its purpose, or to some, it's okay."

 

This means small deviations in the required tolerances are acceptable and not considered a quality defect. Another point which has an important role is that ISO and / or DIN standards in many Chinese companies are unknown. This is because in China there is a separate organization sets the standards (China Association for Standardization (CAS)). Furthermore, there are many in China WFOE (Wholly Foreign Owned Enterprise), the national or regional standards must meet, which are:

  • BSI (British Standards)
  • AFNOR (Association Française de Normalisation)
  • JSA (Japanese Standards Association)
  • GOST (Russia: Gossudarstwenny Standart)
  • ANSI (American National Standards Institute)

 

What opportunities have to be fair in this situation, companies at their own and customer requirements? Many companies, especially the global players here, entertain departments (SCM = Supplier Chain Management or SD = Supplier Development) in which they often employ specialists in quality management and purchasing / logistics. The weakness of this approach is that these employees have little, and only minor experience in manufacturing. They assess based on their professional perfectly correct criteria suppliers on criteria that guarantee true quality systems, -certification, delivery, etc. but an assessment of what in production actually happens can not perform because they lack the knowledge or experience.

 

This approach will very likely only succeed if technically experienced staff is also involved in this process.

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A second approach, and in our opinion the more successful, is looking for small emerging businesses, and to educate through a lengthy, although development program. As these companies have in most cases already have a quality department and a purchase in which employees work who are willing to learn, one can concentrate on the implementation in production. As you may already know, you need here technically experienced staff with experience in quality management, which in most cases of the production already in place. The benefit to you is that you do not need a full team (quality, logistics and production), but depending on the section of the development program only one employee from the respective area.

We believe that this transaction satisfies the PDCA (Plan-Do-Check-Act) cycle.

  1. Plan = Creating the Development Plan (Management)
  2. Do = ensure the qualified products are produced (technical / production)
  3. Check = implementation or improvement of the quality system
  4. Act = communication and continuous improvement process with the supplier

A disadvantage of this approach is that you need skilled production staff that are needed in most cases in-house, as many people in the Chinese branch still young and inexperienced, or because of the high turnover rate can not long remain enough in the company to have sufficient experience.

We can help. With more than 27 years of production experience in all areas of production and many industries, we have the experience needed but also the time necessary. We will lead you in the supplier development project to success and your employees can maintain and focus on the internally necessary projects.

Invite us to a non-binding conversation and learn more about how we can help you.

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